Correlation Between Incar Financial and Nam Hwa
Can any of the company-specific risk be diversified away by investing in both Incar Financial and Nam Hwa at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Incar Financial and Nam Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Incar Financial Service and Nam Hwa Construction, you can compare the effects of market volatilities on Incar Financial and Nam Hwa and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Incar Financial with a short position of Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Incar Financial and Nam Hwa.
Diversification Opportunities for Incar Financial and Nam Hwa
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Incar and Nam is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Incar Financial Service and Nam Hwa Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nam Hwa Construction and Incar Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Incar Financial Service are associated (or correlated) with Nam Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nam Hwa Construction has no effect on the direction of Incar Financial i.e., Incar Financial and Nam Hwa go up and down completely randomly.
Pair Corralation between Incar Financial and Nam Hwa
Assuming the 90 days trading horizon Incar Financial Service is expected to generate 1.64 times more return on investment than Nam Hwa. However, Incar Financial is 1.64 times more volatile than Nam Hwa Construction. It trades about 0.21 of its potential returns per unit of risk. Nam Hwa Construction is currently generating about -0.22 per unit of risk. If you would invest 543,100 in Incar Financial Service on October 24, 2024 and sell it today you would earn a total of 50,900 from holding Incar Financial Service or generate 9.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Incar Financial Service vs. Nam Hwa Construction
Performance |
| Timeline |
| Incar Financial Service |
| Nam Hwa Construction |
Incar Financial and Nam Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Incar Financial and Nam Hwa
The main advantage of trading using opposite Incar Financial and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Incar Financial position performs unexpectedly, Nam Hwa can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nam Hwa will offset losses from the drop in Nam Hwa's long position.| Incar Financial vs. Fine Besteel Co | Incar Financial vs. Daejoo Inc | Incar Financial vs. Ssangyong Information Communication | Incar Financial vs. Shinhan Inverse Silver |
| Nam Hwa vs. KB Financial Group | Nam Hwa vs. ITM Semiconductor Co | Nam Hwa vs. Lotte Data Communication | Nam Hwa vs. Incar Financial Service |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.
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